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Welcome to 2020: a pivotal year for countries to substantially ratchet up their ambition under the Paris Agreement. Under the “ratchet mechanism” (illustrated below) countries are expected to submit new or updated Nationally Determined Contributions (NDCs) that represent a progression compared to the commitments they made in 2015.

Philippines Solar Distributed Generation NAMA

Philippines Solar Distributed Generation NAMA

Catalyzing Distributed Generation in Philippines

The Philippines currently has a number of policies in place to promote distributed solar energy. The Renewable Energy Act of 2008 provides multiple incentives for the development of renewable energy, and the country passed a net metering (NEM) regulation in 2013. Net Metering allows electricity customers who generate their own electricity from renewable sources to feed the electricity they do not use back into the grid. In the Philippines, NEM is applicable to installations up to 100 kW, and customers are compensated at the blended generation rate (~40% of retail rate), which encourages systems to be sized to meet peak load. Despite these enabling policies, uptake has been slow. In collaboration with the Department of Energy (DoE) and the Climate Change Commission, CCAP is working on a nationally appropriate mitigation action (NAMA), to accelerate the uptake of projects under net energy (NEM) regulation.

There are a number of barriers to entry. Net metering permits must comply with multiple permitting and approval processes, including the Distribution Impact Study, as well as electrical, building, and local government permits. These processes are not streamlined, and can increase project soft costs and cause project delays. Additionally there are no accreditation or certification processes for installers or technology. Finally, the high upfront cost of NEM projects is an issue. Financial institutions do not have products nor do they offer non-recourse financing for consumers.

The NAMA will catalyze the market for distributed solar installations by reducing transaction costs and creating standardized products and developing financing options. Permit streamlining, accrediting vendors, and creating a technology certification program will help fast-track low grid-impact projects to come online. The NSP also creates a Credit Guarantee Fund to support a growing domestic private sector and finance distributed solar installations. The NAMA also provides capacity building for financing institutions to bring a variety of low-cost financial products to market.

Reducing the transaction costs and increasing the distributed solar market will additionally lead to long-term price reductions, resulting in a long-term effect of emissions reductions of over 50 MT CO2e cumulatively by 2040.